Share

Charity investors must keep calm, warn fund managers

Charity investors must keep calm, warn fund managers
News

Charity investors must keep calm, warn fund managers

Finance | Gareth Jones | 15 Aug 2011

Charity investors should not make any knee-jerk reactions to recent market volatility, fund managers have advised.

Speaking to civilsociety.co.uk, John Kelly, head of client investment at CCLA, said his clients have not been panicking, which is sensible as equities should still provide value over the long-term.

He said that recent events have not been a justification for the market turmoil, and could be partially put down to a low volume of trading over the summer period.

“When the cat’s away, the traders are getting up to mischief, but that shouldn’t be a distraction against anyone thinking about the long-term.
 
“UK equity market yields of 3.7 per cent are ridiculously good value at these levels, companies have got powerful balance sheets, dividends are growing again, profit growth is going to be positive this year and next, half the world economy isn’t impacted by the debt crisis, and the Chinese economy is growing by 8 per cent or so.”

Meanwhile, Kate Rogers, client director at Schroders, said some charities are concerned that inflation is causing them to lose out on their cash investments, but added that trustees should be careful about upping the risk-level of their portfolios.

“I think the difficult decision at the moment is how much you risk and how much you keep in cash even though the rates are terribly low.

“We would still say, particularly at the moment when markets are volatile, that it should be long-term money for equities, not a short-term trade.

“You need a three-to-five-year time-horizon to be investing in these volatile asset classes.”

“Avoid bonds and UK equities”

Kelly adds that the asset classes charities should be wary of are government bonds, which are in a “spectacular bubble” at the moment, and UK equity.

“This year the biggest change has been to increase significantly the overseas element of our equity portfolio, and that reflects mainly the view that the path the poor old UK is going to have to climb up is steeper and rockier even that we thought a year ago.”

Rogers concludes that markets will be turbulent for some time yet. “It’s not just about fundamentals, it’s not just about valuations, it’s politics.

“Equity analysts are having to turn into political analysts. A lot is being decided behind closed doors, whether it be eurozone political wrangling or UK political wrangling over deficit cuts.

“That’s the difficult thing, and what markets hate most is uncertainty.”

Comments

[Cancel] | Reply to:

Close »

Community Standards

The civilsociety.co.uk community and comments board is intended as a platform for informed and civilised debate.

We hope to encourage a broad range of views, however, there are standards that we expect commentators to uphold. We reserve the right to delete or amend any comments that do not adhere to these standards.

We welcome:

  • Robust but respectful debate
  • Strongly held opinions
  • Intelligent relevant discussion
  • The sharing of relevant experiences
  • New participants

We will not publish:

  • Rude, threatening, offensive, obscene or abusive language, or links to such material
  • Links to commercial organisations or spam postings. The comments board is not an advertising platform
  • The posting of contact details for yourself or others
  • Comments intended for malicious purpose or mindless abuse
  • Comments purporting to be from another person or organisation under false pretences
  • Gratuitous criticism, commentary or self-promotion
  • Any material which breaches copyright or privacy laws, or could be considered libellous
  • The use of the comments board for the pursuit or extension of personal disputes

Be aware:

  • Views expressed on the comments board are left at users’ discretion and are in no way views held or supported by Civil Society Media
  • Comments left by others may not be accurate, do not rely on them as fact
  • You may be misunderstood - sarcasm and humour can easily be taken out of context, try to be clear

Please:

  • Enjoy the opportunity to express your opinion and respect the right of others to express theirs
  • Confine your remarks to issues rather than personalities

Together we can keep our community a polite, respectful and intelligent platform for discussion.

Tags

Free eNews

Macmillan Cancer Support announces £3m corporate partnership with owners of Argos

27 Mar 2015

Macmillan has today announced that it is launching a two-year partnership with Home Retail Group, which...

IoF and government launch 'memorandum of understanding' on payroll giving

26 Mar 2015

The Institute of Fundraising and the Treasury have agreed a new ‘memorandum of understanding’ to improve...

Introduce separate legislation for commercial 'umbrella' lotteries, say MPs

25 Mar 2015

Separate legislation requiring higher payouts to charity should be introduced to govern larger commercial...

Bubb: 'Overzealous' regulatory approach to Muslim charities harming fight against terror

27 Mar 2015

Acevo's chief executive has warned that an "overzealous" approach by regulators is harming, rather than...

Government accepts most proposals on Protection of Charities Bill but rejects terror recommendations

27 Mar 2015

The government yesterday accepted most of a Parliamentary committee’s recommendations on a bill to give...

Charity accused of supporting a terrorist group under investigation

27 Mar 2015

The Charity Commission has opened a statutory inquiry into a charity which failed to complete an action...

Social media 'slacktivism' encourages people to donate, finds JustGiving report

18 Mar 2015

People who share a fundraising page on social media are four times more likely to donate than those who...

Samaritans closes Twitter monitoring app permanently

11 Mar 2015

Samaritans has confirmed that it has permanently closed its app that was designed to monitor people’s...

Daniel Phelan dies, aged 58

13 Feb 2015

Daniel Phelan, owner and editor-in-chief of Civil Society Media, passed away on Wednesday following a...

Join the discussion

 Twitter button

@CSFinance